What is Technical trading rules and indicators fall into four classes:

The contrarian view: Contrary-opinion technicians (contrarians) argue that the majority is generally wrong, so they recommend doing the opposite of what the majority of investors are doing. Even more such useful points are covered in simple way of learning through which you can have a good command on your stream in Finance Homework and Assignment help at xyz.com.

Follow the smart money view: Smart-money technicians feel that smart investors know what they are doing, so they suggest “jumping on the bandwagon” while there is still time.

Momentum indicators are used to make decisions based on the direction of market prices.

Technical analysis employs a variety of price and volume-based indicators.

Contrary Opinions Rules

Contrary opinion technicians use the following six technical indicators:

1. Cash position of mutual funds: The mutual fund cash position is a function of investor expectations and the institutions view of market expectations. Contrary-opinion technicians feel that mutual fund cash positions are a good indicator of institutional investor’s expectations and that they are usually wrong at picking the peaks and troughs of the market cycle. One can get adequate help regarding assignments and homework from xyz.com

Mutual Fund ratio = (mutual fund cash) / (total fund assets)

If the mutual fund ratio (MFR) is greater than 11%, it implies funds are holding cash and are therefore bearish on the market. In this case, contrary-opinion technicians are bullish.

If the MFR is less than 4%, it implies funds are investing cash and are therefore bullish on the market. Contrary-opinion technicians are therefore bearish.

Another way to look at this is that when the mutual fund cash ratio is high, contrarians are bullish because these cash holdings indicate potential future buying power in the market.

2. Investor Credit balances in brokerage accounts: Credit balances are univested cash. Falling credit balances mean “normal” investors are bullish, so contrarians will be bearish and sell. Rising credit means “normal” investors are bearish, so contrarians will be bullish and buy. A technical view of a build-up in credit balances would be that there is an increase in potential future buying power in the market, which is considered to be bullish.

3. Opinions of investment advisory services: The bearish sentiments index used to indicate the level of bearish sentiment among investment advisors. If more than 60% of investment advisory services are bearish, contrarians are bullish. If less than 20% of advisors are bearish, advisors are relatively bullish, so contrarians are bearish and sell.

4. Over-the-counter vs. NYSE volume: Over-the-counter (OTC) issues are more speculative than NYSE issues, and speculative trading increases at market peaks. The level of speculative trading is measured using the ratio of OTC volume to NYSE volume. If the volume ratio is increasing, speculation is increasing, therefore contrarians are bullish. If the ratio is decreasing, investors are bearish, and therefore contrarians are bullish.

5. CBOE put/call ratio: Contrarians use the put/call ratio as an indicator of investors’ bearishness. As such, contrary-opinion technicians become bearish as the ratio increases. If the put-call ratio is equal to or greater than 0.6, the market is bearish, so contrarians are bullish. If the ratio is less than or equal to 0.4, the market is bullish so contrarians are bearish.

6. Stock index futures: Some contrarians track the relative number of future traders who are bullish. When 70% or more of future speculators are bullish, contrarians become bearish. When 30% or less of speculators are bullish, contrarians become bullish.

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